We know that the craft beer industry is growing. We also know that it is growing at a slower rate than what they projected. BUT according to the most recent numbers released by the Brewers Association, there’s more breweries and more being planned.
You can listen to Bart Watson, Chief Economist of the BA speak about the numbers in the video below. He uses terminology like “maturation”, which is really a signal that the craft beer growth is slowing. The BA took a survey and estimates that the market grew at 8%.
I do find it interesting that they used the term “estimates” and used a survey to determine their numbers. I’m no mathematician or statistician, but a survey methodology doesn’t seem all that accurate to me.
As of June 30, a record high of 4,656 breweries were operating in the U.S, an increase of 917 breweries over the same time period of the previous year. Additionally, there were approximately 2,200 breweries in planning. Craft brewers currently employ an estimated 121,843 full-time and part-time workers in a variety of roles including many manufacturing jobs, all of which contribute significantly to the U.S. economy.
Last year the American craft beer market reached it’s historic high of 4,144 breweries. That number gave the US the most breweries in history – Like as in forever. We had over 4,000 breweries in the late 1880s, but due to Prohibition the numbers dropped off dramatically and it wasn’t until the 1990s, due to a number of legislative acts, that we started to see a serious increase in craft breweries in the US.
So there you have it. There’s growth, but it’s slowing down. Obviously, the BA is going to shine as much positive light on the craft market as they can. And they should. The question I have for those 2,200 breweries in planning is, “Should you hurry up and get into the market?” Also, I’d like to know what kind of business plans those 2,200 breweries have? If they plan to be regional breweries, that might not be the best strategy, as it seems local and hyperlocal breweries might be the current successful trend.
So let’s say the market is plateauing. What does this mean for the recent massive acquisitions like Ballast Point’s $1 billion sale? I’m assuming Constellation Brands was well aware the market would slow, but is it slowing faster than they expected? To make their money back and turn a profit they are going to have to push extra hard to make Ballast both a national and international brand.
We’ll see what happens in the coming year, but it’s safe to say breweries in planning will be faced with a different market than those that got in within the last two years.